How to avoid the dreaded rework in SME loan applications

Ahead of his session at the free SME Broker Bootcamp 2023, John Sgambelluri – who is also managing director at Prime Profit System – has flagged that lack of clarity and missing information in an application could lead to rework, causing longer delays.

“Rework is what every broker dreads,” he told The Adviser.

“It means the deal is pushed to one side and we lose valuable time: time to approval, time to settlement, and time to being paid.”

Given that the application does not automatically jump back to the front of the “dreaded deal queue” once the missing information is provided, this can cause additional delays in securing finance.

Executing effective fact-finding by asking appropriate questions and gathering relevant information is paramount, Mr Sgambelluri said. Brokers who fail to consider the client’s industry, purpose, goals, and potential risks are more likely to face rework, he noted.

Ensuring that the client’s financial information is accurate, current, and correlates with the commentary the broker provides is also crucial.

“Make your deal easy to access,” Mr Sgambelluri said.

“It should flow in a considered order, while the annexures such as financials and contracts should be numbered and easy to find.”

A high-quality fact-find could save time, ensure seamless deal writing, help transition into a credit memorandum, and as such, a client mandate letter and fee, he said.

“Brokers are always striving to give their clients the best price possible,” Mr Sgambelluri said.

“The better the deal is presented, the better the client’s risk grade, and therefore a more competitive risk margin, fewer conditions, easier subsequent approvals, and less onerous annual reviews.”

To present SME clients optimally so they can access funding at the right price, brokers must cover the key points succinctly, mitigate associated risks, and state the purpose with clarity, the Accendo Financial co-founder said.

“I know it can be difficult having clients support their own deal with security they may not want to provide but it saves money,” Mr Sgambelluri told The Adviser.

“Besides, if the client doesn’t have 100 per cent belief in the deal, why should anyone else? Ironically, many of the assets are captured under a personal guarantee and the price would be much cheaper.”

Mr Sgambelluri also urged brokers to “avoid waffle” in their clients’ applications and provide facts and figures to paint a clear picture of current and future business performance as well as how this application could improve the business.

“The broker is the eyes and ears of their clients’ business. It’s up to them to share their client’s story in the best possible way,” he said.

“Cover all important facts and present a deal you would personally support.”

Mr Sgambelluri’s comments precede his sessions at the SME Broker Bootcamp, a free conference where he will detail how to present a client’s deal effectively to gain indicative support, and how to present them in the best light to help them access capital speedily and at the right price.

At the SME Broker Bootcamp, he will introduce brokers to the loan forecasting model to help them frame their loan purpose and proposal.

“Consider this: every single decision a business owner makes has consequences in dollars and cents,” he said.

“What if we could provide you with a tool that, with a single stroke of a key, shows the true cost of your clients’ decisions? That’s what we’ll do at the bootcamp.”

The 2023 SME Broker Bootcamp will take place in the following locations:

Wednesday, 6 September: Rydges South Bank, Brisbane

Tuesday, 12 September: Montage, Sydney

Thursday, 14 September: Zinc, Melbourne

Places are limited for this free conference so book your place now by registering here.

For more information about the conference, including agenda and speakers, click here.

[Related: 1 in 4 SMEs declined for big bank finance: OnDeck]